Oxygen-containing defects are very important for altering the nonlinear optical (NLO) properties of graphene. To investigate the correlation between oxygen-containing defects and the synergistic NLO response in graphene-based nanocomposites, we attached CdS nanocrystals on the surface of graphene (G) and prepared G/CdS nanohybrids (NHs) consisting of various oxygen-containing functional groups via a chemical method. The NLO absorption and refraction of G/CdS NHs under single pulse laser irradiation are enhanced by 10.8 times with the concentration decrease of surface oxygen-containing groups, which might be attributed to the local field effects and synergetic effects stemming from charge transfer between the two components. However, the optical nonlinearity is decreased with further concentration decrease, which might arise from sp2 fragment interconnection and surface defects in the NHs. The NLO absorption transformation from two-photon absorption to saturable absorption with oxygen decrease is observed, and intensity-related NLO absorption and refraction in NHs are also discussed. Meanwhile, the G/CdS NHs exhibit superior NLO properties, implying potential applications of NH material in NLO devices.